Q) One credit card processor is offering me rates WAY lower than everyone else? Is he trying to rip me off, or is everyone else?
A) Don’t let anyone — a bank or a credit card processing vendor — tease you with rates that are too good to be true.
There’s a reason you ignore those “low introductory rate” consumer credit card offers that come in the mail — you know they will eventually skyrocket. While an introductory consumer credit card rate usually lasts for a limited time, the variables for credit card processing are almost too numerous to count. When offered any rate, be sure to ask your processor:
- What type of credit and debit cards does the offered rate apply to?
- How long will this rate last?
Credit and Debit card accounts are attached to a multiple of incentive and reward programs designed to encourage consumers to keep spending on goods and services like yours.
Fulfilling those rewards – from “cash back” to “airline miles” costs money, so the credit card companies pass along most, if not all, of that cost to the merchants. Just because a store sells someone a loaf of bread for $1.00; the percentage of that dollar they pocket will vary based upon how the consumer pays. While “cash” is king, allowing the merchant to keep 100% of the sale, debit cards untied to a reward program come in a close second. These cards are usually the ones attached to the low rates dangled before your eyes. On the other end of the spectrum, credit cards tied to pricey rewards programs offer the highest rates, resulting in less money to line your pocket.
Bottom line, if you’re shopping for credit based upon the lowest rate, you’re playing a game you’re bound to lose.
